Real adjusted gross disposable income per capita was only 0.73 percent higher

Real actual final consumption per capita was up only 1.66 percent

Nominal wages rose 4.64 percent, or less than half the rate of increase in nominal income.

As chart below shows, in simple terms, the last nine years saw:

Basically flat real adjusted gross disposable incomes per capita; and

Widening gap between real actual consumption per capita and the real adjusted gross disposable income per capita

Coupled with a simple fact that the EA19 includes countries with consumption and incomes catching up toward the EA12 averages, while gross disposable income does not net out fiscal losses sustained due to post-crisis tax and spending rebalancing across the EA19, the picture is quite dire: there is, effectively, no meaningful growth in incomes in the euro area for some 9-10 years running. Worse, when we adjust for ageing demographics, the marginal increase in the real consumption of the last 9-10 years is also far from being comforting.

While the Eurostat does not report received real wages dynamics, using income deflator we can estimate changes in the real wages. Chart below shows the results:

In real (inflation-adjusted) terms, take home (received) wages have fallen in the EA19 group of countries in 2003-2016, with 3Q 2016 real wages index reading at around 93.6, down 6.4 percentage points on the end of 2003. A caveat applying to this is that I am using index values to map out nominal-to-real revaluation. Still, minor errors and rounding issues aside, the chart above clearly shows the lack of real wages income uplift in the EA19 since the early 2000s.

Disclaimer

This blog represents my personal views and is not reflective of the views or opinions held by any company, contractor, client or employer I work for currently or have worked for in the past. These views are not an endorsement to take any action in the markets or of any political position, figures or parties.

“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams.” Gabriel Garcí­a Márquez

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"Getting worse more slowly is not the same as getting better", Prof. Brad DeLong